HANNOVER, GERMANY. Just two weeks after revealing they had forged a “wide-ranging strategic alliance,” the chief executives of Volkswagen Truck and Bus and Navistar International Corp. fielded questions from North American journalists covering the massive IAA truck show opening here this week.
Their overall take on the deal was that it enables them to together develop advanced technology that will be needed by global truck markets for years to come.
On Sept. 7, VW announced it would acquire a 16.6% equity stake in Navistar and that the two OEMs would act as partners to share technological developments, especially regarding powertrains, and to pursue global sourcing opportunities to increase economy of scale.
Andreas Renschler, CEO of Volkswagen Truck & Bus, which also owns Europe-based global truck builders Scania and MAN, and Navistar CEO Troy Clarke said that discussions with an eye to seeking synergies that ultimately led to the deal began a year ago. Actual negotiations began only in March.
“We are looking forward to a successful alliance,” said Renschler, who is familiar with the North American trucking industry from when he headed up Daimler Trucks before moving onto VW two years ago. “Navistar needs what we can offer, including engines, transmissions and axles,” he said. He noted that thanks to the alliance, VW will be able to take into account Navistar’s requirements as it develops new products.
“We are excited to have found a partner that looks at the future the way we do and with whom we have a high degree of alignment,” said Clarke, CEO of Navistar. “We have a common vision of the industry and its issues. That we can do it better together makes it a perfect fit.”
Alluding to Navistar’s expensive recovery from having opted to pursue an EGR instead of the SCR solutions pursued by its competitors to meet EPA 2010 emissions standards, Clarke said the industry “turned left and we went right.” Nonetheless, he said that Navistar is well-positioned as a partner for VW as it is a strong “stand alone” in its own right.
“Our teams can work on next level [technologies,” said Clarke. “It’s not so much about ‘2020’ but where we will be in 10 years and so on. The [VW] deal does not solve all the problems, but it creates opportunities that did not exist six months ago.” He said that customer feedback on the partnership has been “very positive” and noted that Navistar is “well positioned and prepared for when business [in North America] picks up.”
Renschler remarked that there will always be difference in truck markets. “Some markets, like China, are 20 years away from our technology; India is 35 years away.” As for North America, he said that 2021 was a realistic timeframe for VW to develop an engine tailored for Navistar.
He also stressed that, in the partners’ view, technology-sharing isn’t about providing one-off solutions, but striving to enhance both brands through back-and-forth cooperation.
“We can use components from each other and go into markets,” Renschler said. “No one regional player alone can do.New drivetrain technology is one thing, but to enable our customers to be more profitable and more efficient, that is our goal.”
“It’s all about finding the right technology,” said Clarke, including integrating systems. "There’s a big shelf of technology to draw from at VW. But everything of onterest has to provide value to our customers.”